Fundamental Analysis Formulas Flashcards

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1
Q

Formula for Net Worth

A

Assets - liabilities

Net worth = assets - liabilities

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2
Q

Formula for book value

A

Net worth - (preferred and intangibles)

Book value = net worth - preferred - intangibles

•Can be thought of as the NAV of a company

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3
Q

Formula for: Book value per share

A

Book value / number of outstanding common shares

or

(Net worth - preferred - intangibles) / number of outstanding common shares

  • Indicates a firms NAV on a per share basis
  • Book value = net worth - (preferred and intangibles)
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4
Q

Formula for dividend yield

A

Annual dividend / CMV

Example: stock trading @ $42 pays $2 annual dividend.
$2 / $42 = 4.76% dividend yield

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5
Q

Formula for current assets

A

Cash and equivalents + accounts receivable + inventory

Measures liquidity, shows assets that can be turned to cash within 1 year

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6
Q

Formula for current liabilities

A

Accounts payable + accrued wages and taxes payable

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7
Q

Formula for working capital

A

Current assets - current liabilities

  • Amount of capital a company can readily use for day to day operations
  • Measures liquidity, operational efficiency, and short term financial health
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8
Q

Formula for current ratio (aka “working capital ratio”)

A

Current assets / current liabilities

•company’s ability to pay short term debts with current assets

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9
Q

Formula for total capitalization

A

Long term debt + net worth

Total capitalization = long term debt + net worth

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10
Q

Formula for debt ratio

A

Long term debt / total capitalization

or

Long term debt / (long term debt + net worth)

  • Measures amount of leverage used by company
  • Total capitalization = long term debt + net worth
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11
Q

Formula for EPS

A

Earnings available to common / total outstanding common shares

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12
Q

Formula for P/E ratio

A

CMV / Earnings per share

•EPS = earnings available to common / total outstanding common shares

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13
Q

Formula for dividend payout ratio

A

Common dividends / EPS

•EPS = earnings available to common / total outstanding common shares

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14
Q

Are dividends payable a current liability?

A

Yes

Current liability

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